Big Buyout Firms to Pay $325 Million to End Collusion Lawsuit

Blackstone Group LP, KKR & Co. and TPG Capital LP, among the biggest alternative-asset managers, agreed to pay a combined $325 million to settle seven-year-old claims they colluded to keep leveraged-buyout prices low.

The accords, made public Thursdayday in a federal court filing in Boston, leaves two entities of Carlyle Group LP, the world’s second-biggest private-equity firm, as the only defendants in a trial scheduled to start Nov. 3. The settlements still need approval from a judge.

“Plaintiffs have overcome defendants’ attacks on multiple fronts, including early efforts to transfer the case, dozens of motions to dismiss and for summary judgment,” the plaintiffs’ lawyer Thomas Undlin said in the filing.

The complaint, filed in December 2007, listed 19 leveraged buyouts and eight related transactions in which the private-equity firms were accused of shortchanging shareholders in target companies out of billions of dollars by agreeing to suppress takeover bids. The defendants deny the accusations.

The prices were held down when the private-equity firms formed groups to take companies private, according to the complaint. The firms were accused of agreeing not to compete for exclusive deals and allocating transactions among themselves.

The settlements will be invalidated if the class, or group, of tens of thousands of potential class-action plaintiffs isn’t approved by the court at a hearing scheduled for Sept. 4 in Boston, according to the filing. The parties will seek preliminary approval of the accords at the same hearing.

Rig Bids?

The firms argued at a December 2012 hearing that the plaintiffs hadn’t provided evidence of an overarching conspiracy to rig bids. The deals represented legitimate practices of the mergers-and-acquisitions business, they said. A judge in March 2013 refused to dismiss the case.

Plaintiffs, including the Police and Fire Retirement System of the City of Detroit pension fund and Minnesota-based investor Kirk Dahl, earlier settled with Bain Capital Partners LLC, the world’s biggest private-equity firm, for $54 million, according to the filing. Goldman Sachs Group Inc. settled for $67 million, and Silver Lake Technology Management LLC resolved the case for $29.5 million.

“While we continue to believe that the plaintiffs’ allegations are spurious, we determined that after seven years it was best for KKR and our limited partners to put an end to the distraction and expense of this litigation,” the company said.

Company Responses

Blackstone didn’t immediately respond to a request for comment on the settlements. TPG spokeswoman Lisa Baker, Blackstone spokesman Peter Rose and KKR spokeswoman Kristi Huller, all declined to comment on the settlements.

“These claims are without merit and we will continue to vigorously contest the allegations,” Carlyle spokesman Chris Ullman said in a statement.

A federal judge dismissed suits against defendants including Apollo Global Management LLC and Providence Equity Partners Inc. over the past two years.

The case is Dahl v. Bain Capital Partners LLC, 07-12388, U.S. District Court, District of Massachusetts (Boston).